| RMB appreciation fosters more Chinese companies to go abroad | |
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| Feb 19, 2008 02:05 |   |
 | In recent years, more and more Chinese enterprises and companies and financial institutions have gone abroad to do investment. Meanwhile, they have started to merger with foreign companies and corporations. Such as Chinese national investment corporation, Chinese Merchant Bank, Bank of China etc have done investment abroad or have established their branches in other foreign countries. This reminds me of 1980s' Japan. In 1980s, Yen appreciated very fast so that many Japanese companies went out to do their merger and acquisition. Once they bought Rockefeller Center and this made many American nationals believe that Japan was trying to 'buy' America. China's current situation is quite similar with that in 1980's Japan. RMB has appreciated 12 percent since 2005. On Feb. 18th, Yuan's exchange rate against dollar was 7.1667: 1. Really amazing! With the help of RMB, more Chinese companies can acquire or merge with foreign comporations at low cost. About forty percent of total direct foreign investment in 2006 were realized by merger and acquisition. Not only those state owned enterprises but also some private companies have gone abroad to acquire and merge with foreign corporations. Merger and acquisition are the most effect way for those Chinese enterprises to enter foreign markets. More and more Chinese enterprises and corporations will go out to invest. So what do you think of Chinese enterprises and corporations' merger and acquisition? Will China follow the steps of Japan? |
| Feb 20, 2008 21:35 | #1 |
| I'm not that familiar with Japan's economy from the past except the fact that their property values were very high, the yen was in crisis at one point in time and that they did invest heavily in the U.S. How the average Japanese worker fared in all of this over time, I have no idea. That being said... it appears that most industrialized countries over a long period of time find it more profitable to invest overseas or invest in financial instruments tied to other countries than to invest in their own industrial infrastructure.This , no doubt, weakens that particular countries future. China does still have one advantage... and that is it's labor wages are still lower than most other countries. So... I can see where China would want to acquire raw materials from other countries and import them for manufacturing (still cheaper than labor wages of that country) or if China did acquire mfg. assets abroad then have Chinese workers take over the production(but then a problem with the cost of living in that area vs. Chinese wages). Kevin Phillips and Paul Kennedy have some books in regards to Super Powers from the past and their downfalls. |
| Feb 20, 2008 22:37 | #2 |
| Gary, what's the book's name? ''the cost of living in that area vs. Chinese wages'' white collar young couples with ave earnigs 15000-20000 spend round 20 yr to pay off pay off in shanghai. |
| Feb 20, 2008 22:40 | #3 |
| correction: to pay off home mgt. |
| Feb 21, 2008 13:13 | #4 |
| Marrie....There are no books either by Kennedy or Phillips( to my knowledge) that relate directly to China's labor costs and the cost of living in other countries. I just stated "that" as a decision that China would possibly have to consider if investments were to be made overseas in manufacturing that was already established and then determine whether it would be cheaper to utilize imported Chinese labor or retain the existing labor market of that country, i.e. if China wanted to pay the existing wages for its (China) workers then China would have to provide the housing, food, and etc. to offset the higher cost of living of that country (provided the wages and cost of living were higher in that country) Books by Kevin Phillips are: "Arrogant Capital", "Wealth and Democracy", "The Politics of Rich and Poor",and "Boiling Point". Paul Kennedy is the author of "The Rise and Decline of the Great Powers" |
| Feb 21, 2008 20:00 | #5 |
| "With the help of RMB, more Chinese companies can acquire or merge with foreign comporations at low cost." I agree on this point. On the other hand, these Chinese corporations can acquire advanced technology and equipment quickly. But they should be cautious when doing investment overseas. |
| Feb 21, 2008 20:22 | #6 |
| Gary, the trend is US is outsourcing manufacturing (labor-intensive) to China. If this is multinational business, what china got is the valuable assets – world-class management and its global experience. If china invest foreign business or further acquire business abroad, the business will be highly capital intensive with qualified local mgt team and working staff. |
| Feb 21, 2008 21:01 | #7 |
| Overseas markets are investing in China because of it's lower labor costs while China is investing in overseas markets because of advanced labor and technology assets(a full circle deal) |
| Feb 21, 2008 21:11 | #8 |
| gary, china has no shortage of tech. and skilled human resource, what they need is to learn international business rules system (most of stuff belong to 3rd industry), advanced mgt experience, that is one key of international level business |
| Feb 21, 2008 21:43 | #9 |
| They can learn about international business rules in Las Vegas, Nev. Which...by the way, is about time for me to take a Greyhound bus to as this area that I'm living in is getting boring. |
| Feb 21, 2008 21:59 | #10 |
| which means life is not hard to you. If i were you, i would look for something that could chanllenge my limites instead of gambling or taking drugs.(you are not gambler /drug addict, are you? he he) |
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